American Airlines Files for Bankruptcy Protection

CEO Gerard Arpey steps down as the third largest U.S. flyer and its parent company seek to cut costs and unload an enormous debt.

American Airlines and its parent company, AMR Corp., announced Tuesday plans to file for Chapter 11 protection to attempt to unload a large debt accrued from years of high jet fuel prices and ongoing labor struggles.

It was also announced that CEO Gerard Arpey had stepped down and has been replaced by company president Thomas W. Horton, the Associated Press reports.

The company, which was the only major U.S. flyer not to file for bankruptcy following the September 11 terrorist attacks, which triggered a long-running slump in the industry, has continued to lose money over the last two years as other companies began making profits again.

Horton said AMR Corp.'s board of directors unanimously decided to seek Chapter 11 status after meeting Monday in New York and again by conference call Monday evening.